What is the value of the security if required rate of return

Assignment Help Financial Management
Reference no: EM13949365

If an equity security has $7.00 earnings per share [EPS] that are expected to remain stable in perpetuity, and expects to maintain a 100% payout ratio to shareholders, what is the value of the security if its required rate of return = 14%?

Reference no: EM13949365

Questions Cloud

The gross return on assets and the expense ratio : Consider a hedge fund with $200 million at the start of the year. The benchmark S&P 500 index was up 16.5% during the same period. The gross return on assets is 21% and the expense ratio is 2%. For each 1% above the benchmark return the fund managers..
Two igneous rocks crystallized at different times : Two igneous rocks crystallized at different times at the same geographic location on a continent. One rock crystallized at 120 Ma and records a magnetic inclination of 68 degrees; the second rock crystallized at 65 Ma and records a magnetic inclin..
Prepare a document containing the logical design : State any assumptions you make about the problem, especially those required for correct interpretation of your diagram.
James has a prize race horse : James has a prize race horse named Mr. Ed.   James is in desperate need of some quick cash so he goes to a wealthy local horse trainer to see if he can borrow $50,000 from him.  The wealthy horse trainer agrees to loan the $50,000 to James, but wants..
What is the value of the security if required rate of return : If an equity security has $7.00 earnings per share [EPS] that are expected to remain stable in perpetuity, and expects to maintain a 100% payout ratio to shareholders, what is the value of the security if its required rate of return = 14%?
How much total interest is paid over the life of the loan : Amortization with Equal Payments [LO 3] Prepare an amortization schedule for a three-year loan of $81,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loa..
Relationship between years at company and job satisfaction : Does the regression support the claim that on average, employees with longer tenure at the company are more satisfied with their job, holding salaries and gender fixed? Use a 5% significance level.
Identify and explain the characteristics of reform policing : Identify and explain the characteristics of reform policing. why did reform era policing develop in the united state
Net earnings- payout ratio-retained earnings will increase : Which one of the following is correct for a firm with $400,000 in net earnings, 50,000 shares, and a 30% payout ratio? A. Retained earnings will increase by $120,000. B. Each share will receive a $1.20 dividend. C. $120,000 will be spent on new inves..

Reviews

Write a Review

Financial Management Questions & Answers

  Profitability index

A project has an initial cost of $62,575, expected net cash inflows of $13,000 per year for 9 years, and a cost of capital of 13%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.

  What are the dividends per share-earnings per share

Billy’s Exterminators, Inc., has sales of $752,000, costs of $312,000, depreciation expense of $64,000, interest expense of $42,000, a tax rate of 35 percent, and paid out $57,600 in cash dividends. The firm has 120,000 shares of common stock outstan..

  Expected rate of return is less than required rate of return

If the expected rate of return is less than the required rate of return, should you buy the stock? If you already own the stock, should you keep it or sell it?

  Best guess as to the value of the bond

You buy an 11 percent, 30-year, $1,000 par value floating rate bond in 1999. By the year 2014, rates on bonds of similar risk are up to 13 percent. What is your one best guess as to the value of the bond?

  Influence human rights issues

Discuss the following topic - Should trade restrictions be used to influence human rights issues

  Bonds yield to maturity and coupon interest rate

The relationship between a bond's yield to maturity and coupon interest rate can be used to predict its pricing level. For each of the bonds listed, state whether the bond will be at a premium to par, at par, or at a discount to par:

  Conduct a gap analysis for anthonys orchard

Conduct a gap analysis for Anthonys Orchard - Devise a benchmarking review for Anthony's Orchard. To do this, discuss recommended strategies and measures that will be useful to measure progress towards the objective in your gap analysis.

  What is current beta

Harley Motors has $25 million in assets, which were financed with $10 million of debt and $15 million of equity. Harley's tax rate is 40%. If Harley's unlevered beta is 0.8, what is Harley's current (levered) beta? Show your work.

  The number of electric stapler sales budgeted

Melbourne Company manufactures and sells electronic staplers for $16 each. If 10,000 units were sold in December and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:

  Calculate a firms cost of equity

Consider one of the two equations that can be used to calculate a firm's cost of equity: rE=Div1/P0+g. If the expected growth rate of American Airlines common stock dividends increases and if the price of AAL's stock also increases, what happens to A..

  Effective annual interest rate on this lending arrangement

Come and Go Bank offers your firm a discount interest loan at 7 percent for up to $32 million, and in addition requires you to maintain a 5 percent compensating balance against the amount borrowed. What is the effective annual interest rate on this l..

  About the stock valuation

Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out i..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd